New Delhi: The borrowing spree of the National Highways Authority of India (NHAI) to fund the Centre’s ambitious highway expansion programme has come under flak from a parliamentary panel, which was “distressed” to note the agency’s huge debt servicing liability to the tune of over Rs 97,000 crore in the coming years.
The central government’s main highway building authority has been forced to increasingly rely on market borrowings — up nearly 1800 per cent from 2014-15 — as budget allocations have failed to keep pace — rising just 40 per cent since 2015-16 amid a massive highway expansion drive.
In its report tabled in Parliament Tuesday, the Standing Committee on Transport, Tourism and Culture also expressed “anguish” that as many as 888 road projects under the Union road ministry are delayed at present, which amount to Rs 3,15,373.3 crore involving a length of 27,665 kilometres.
“Delays in completion of ongoing road projects cause a huge loss of time and greater consumption of fuel, to countless number of road users across the country, besides the increase in the project cost that has to be incurred by the ministry,” the 31-member committee headed by Rajya Sabha MP T.G. Venkatesh noted its report.
Pulling up the ministry for the delay, the committee said it must focus on and prioritise completion of the ongoing delayed projects instead of announcing and awarding new road projects in the country.
‘Abnormally high number of delayed projects in Maharashtra’
The parliamentary panel also noted that Maharashtra, compared to other states, has an abnormally high number of delayed road projects.
It has recommended that the ministry evolve a robust coordination mechanism with the states and work out the delay resolution mechanism.
The panel also expressed its “concern” that against a target of 6,469 km during the FY 2020-21 under the Bharatmala programme, the ministry has been able to award only 2,517 km till January 2021. It has also been able to complete construction of only 2,273 km, as against the target of 4,571 km.
“…if this trend continues, it would not be possible for the ministry to meet the targeted timeline of completion of Bharatmala Pariyojana Phase-I by FY 2025-26, which is already lagging four years behind the originally targeted completion of Phase-I by FY 2021-22,” the panel noted.
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NHAI debt servicing liability for next 3 fiscals even higher
The committee noted that the debt servicing liability of NHAI for the next three financial years are even higher than the estimates that the ministry had provided to the committee during its examination of Demands for Grants for 2020-21.
It has recommended that NHAI prioritise the completion of its delayed road projects to prevent further cost escalation.
It has also recommended that NHAI explore restructuring of its existing debt and prepare proposals to raise long-term funds through the upcoming Development Financial Institution announced by finance minister Nirmala Sitharaman in the budget.
The Narendra Modi government has been ambitious about highway expansion, launching programmes like the flagship Bharatmala. But its allocation for NHAI hasn’t kept pace.
To meet its capital expenditure, the highways authority has had to rely on market borrowings, including issuance of capital gains tax exemption bonds and loans from the National Small Savings Fund.
Minuscule investment by private sector
The parliamentary panel has also expressed concern that even though the expenditure incurred by NHAI is consistently rising, the investment by the private sector has been minuscule compared to the expenditure incurred by NHAI during 2020-21.
The panel has recommended the highways ministry to take concrete steps to encourage participation of the private sector in the road infrastructure projects across the country.
Edited by Sanghamitra Mazumdar
Also read: With growth in mind, finance ministry asks infrastructure ministries to ramp up spending